Monsanto profit falls in first quarter, but share price rises on bullish outlook

PostedJul. 3rd, 2014

(Reuters) — Monsanto reported a six percent drop in quarterly profit last week, but shares jumped more than five percent as the world’s largest seed company beat forecasts, improved its near-term outlook and said it planned to double earnings over the next five years.

The company also announced authorization of a $10 billion share repurchase and cited strong progress on a new farm data business platform.

Monsanto said that although earnings for the third quarter ended May 31 were down in the face of challenging market conditions, the overall outlook was bright.

“We’re on track for seeds and traits to drive a majority of our full year growth,” said company chair Hugh Grant. “That performance in a more challenging agricultural environment speaks to the breadth and customer value of our product portfolio.”

Grant said the company aims to at least double full-year ongoing earnings by the end of fiscal 2019. Most of the growth will come from new seed and GM traits in the pipeline.

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“The confidence level is off the charts,” said John Roberts, executive director of U.S. chemical equity research at UBS. “They feel they have as deep a growth pipeline as they’ve had in a long time.”

Monsanto said it earned $858 million, or $1.62 a share, in the third quarter, down from $909 million, or $1.68 a share, a year earlier, but it beat the average forecast of $1.56 a share from analysts.

Corn seed , the company’s largest revenue source, will remain a growth driver. The crop contributed $1.3 billion this quarter to total net sales of $4.25 billion.

The company said the outlook for its Roundup business was flat to lower, but its new farm data business unit, the Climate Corp., is promising. It has signed deals with retail partners and expects more than 40 million U.S. acres using its basic farm data tool and more than one million acres using a premium service.